%postname% A sanitized version of the title of the post (post slug field on Edit Post/Page panel). So “This Is A Great Post!” becomes this-is-a-great-post in the URI (see Using only %postname%). Starting Permalinks with %postname% is strongly not recommended for performance reasons.. *** Note - this has been changed and is ok to do since ver. 2.0
%category% A sanitized version of the category name (category slug field on New/Edit Category panel). Nested sub-categories appear as nested directories in the URI. Starting Permalinks with %category% is strongly not recommended for performance reasons.